(This abstract was borrowed from another version of this item.)"> (This abstract was borrowed from another version of this item.)">
Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/clt/sswopa/728.html
   My bibliography  Save this paper

Organizational Diseconomies of Scale

Author

Listed:
  • McAfee, R. Preston
  • McMillan, John.
Abstract
Private information creates a cost of operating a hierarchy, which becomes larger as the hierarchical distance between the information source and the decision maker increases. When information about a firm's capabilities is dispersed among the individuals in the firm, production is inefficient even though everyone behaves rationally. Because hierarchies need rents in order to function, a firm with a long hierarchy may not be viable in a competitive industry. Copyright 1995 by MIT Press.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • McAfee, R. Preston & McMillan, John., 1990. "Organizational Diseconomies of Scale," Working Papers 728, California Institute of Technology, Division of the Humanities and Social Sciences.
    • Handle: RePEc:clt:sswopa:728
    as

    Download full text from publisher

    File URL: http://www.hss.caltech.edu/SSPapers/sswp728.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Yingyi Qian, 1994. "Incentives and Loss of Control in an Optimal Hierarchy," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 61(3), pages 527-544.
    2. Milgrom, Paul R, 1988. "Employment Contracts, Influence Activities, and Efficient Organization Design," Journal of Political Economy, University of Chicago Press, vol. 96(1), pages 42-60, February.
    3. Laffont, Jean-Jacques & Tirole, Jean, 1986. "Using Cost Observation to Regulate Firms," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 614-641, June.
    4. repec:bla:ecorec:v:64:y:1988:i:187:p:295-306 is not listed on IDEAS
    5. Oliver D. Hart, 1983. "The Market Mechanism as an Incentive Scheme," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 366-382, Autumn.
    6. Dearden, James & Ickes, Barry W & Samuelson, Larry, 1990. "To Innovate or Not to Innovate: Incentives and Innovation in Hierarchies," American Economic Review, American Economic Association, vol. 80(5), pages 1105-1124, December.
    7. Jean‐Jacques Laffont, 1988. "Hidden Gaming in Hierarchies: Facts and Models," The Economic Record, The Economic Society of Australia, vol. 64(4), pages 295-306, December.
    8. Milgrom, Paul & Roberts, John, 1990. "Rationalizability, Learning, and Equilibrium in Games with Strategic Complementarities," Econometrica, Econometric Society, vol. 58(6), pages 1255-1277, November.
    9. Tirole, Jean, 1986. "Hierarchies and Bureaucracies: On the Role of Collusion in Organizations," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 2(2), pages 181-214, Fall.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Holmstrom, Bengt R. & Tirole, Jean, 1989. "The theory of the firm," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 2, pages 61-133, Elsevier.
    2. Kofman, Fred & Lawarree, Jacques, 1996. "A prisoner's dilemma model of collusion deterrence," Journal of Public Economics, Elsevier, vol. 59(1), pages 117-136, January.
    3. repec:cte:wbrepe:6526 is not listed on IDEAS
    4. Naseer, Shaheen & Heine, Klaus, 2017. "Bureaucratic Identity and the Shape of Public Policy: A Game Theoretic Analysis," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168144, Verein für Socialpolitik / German Economic Association.
    5. Ingela Alger, 2006. "Optimal Debt Contracts when Credit Managers are (Perhaps) Corruptible," Boston College Working Papers in Economics 648, Boston College Department of Economics.
    6. Qiao Wang, 2023. "Does the Chinese labour force make sufficient efforts? Empirical evidence using non‐parametric analysis," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(3), pages 3262-3280, July.
    7. De Chiara, Alessandro & Livio, Luca, 2017. "The threat of corruption and the optimal supervisory task," Journal of Economic Behavior & Organization, Elsevier, vol. 133(C), pages 172-186.
    8. Robin, Stéphane & Rusinowska, Agnieszka & Villeval, Marie Claire, 2014. "Ingratiation: Experimental evidence," European Economic Review, Elsevier, vol. 66(C), pages 16-38.
    9. Pedro Ortín‐Ángel & Vicente Salas‐fumás, 1998. "Agency‐Theory and Internal‐Labor‐Market Explanations of Bonus Payments: Empirical Evidence from Spanish Firms," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 7(4), pages 573-613, December.
    10. Laffont, Jean-Jacques, 1994. "The New Economics of Regulation Ten Years After," Econometrica, Econometric Society, vol. 62(3), pages 507-537, May.
    11. Alberto Cavaliere & Simona Scabrosetti, 2008. "Privatization And Efficiency: From Principals And Agents To Political Economy," Journal of Economic Surveys, Wiley Blackwell, vol. 22(4), pages 685-710, September.
    12. Kouroche Vafaï, 1999. "A Theory of Abuse of Authority in Hierarchies," CIRANO Working Papers 99s-07, CIRANO.
    13. Vafai, Kouroche, 2002. "Preventing abuse of authority in hierarchies," International Journal of Industrial Organization, Elsevier, vol. 20(8), pages 1143-1166, October.
    14. Priks, Mikael, 2011. "Firm competition and incentive pay: Rent seeking at work," Economics Letters, Elsevier, vol. 113(2), pages 154-156.
    15. Duarte Brito & Pedro Pereira & João Vareda, 2016. "Impact of the Information Asymmetry Between Managers and Owners Under Oligopoly," Southern Economic Journal, John Wiley & Sons, vol. 82(4), pages 1311-1326, April.
    16. Walter A Cont, 2001. "Essays on Contract Design: Delegation and Agency Problems, and Monitoring Under Collusion," Levine's Working Paper Archive 625018000000000122, David K. Levine.
    17. repec:eee:labchp:v:3:y:1999:i:pb:p:2373-2437 is not listed on IDEAS
    18. Antoine Faure-Grimaud & Jean-Jacques Laffont & David Martimort, 2000. "A Theory of Supervision with Endogenous Transaction Costs," Annals of Economics and Finance, Society for AEF, vol. 1(2), pages 231-263, November.
    19. Agnieszka Rusinowska & Vassili Vergopoulos, 2020. "Ingratiation and Favoritism in Organizations," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 176(3), pages 413-445.
    20. Lorens Imhof & Matthias Kräkel, 2016. "Ex post unbalanced tournaments," RAND Journal of Economics, RAND Corporation, vol. 47(1), pages 73-98, February.
    21. Frederiksen, Anders & Lange, Fabian & Kriechel, Ben, 2017. "Subjective performance evaluations and employee careers," Journal of Economic Behavior & Organization, Elsevier, vol. 134(C), pages 408-429.
    22. B. Caillaud & R. Guesnerie & P. Rey & J. Tirole, 1988. "Government Intervention in Production and Incentives Theory: A Review of Recent Contributions," RAND Journal of Economics, The RAND Corporation, vol. 19(1), pages 1-26, Spring.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:clt:sswopa:728. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Victoria Mason (email available below). General contact details of provider: http://www.hss.caltech.edu/ss .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.